Abercrombie & Fitch gross sales development slowed once more in its fiscal second quarter because the attire firm struggles to high the surge it loved final fiscal yr.
In the course of the quarter, gross sales on the namesake Abercrombie model fell 5% whereas comparable gross sales dropped 11%.
However the success of the teen-focused Hollister model helped to salvage the quarter. General, Abercrombie & Fitch gross sales climbed 7%, led by 19% development at Hollister – the model’s best-ever second-quarter web gross sales development, the corporate stated. Comparable gross sales throughout the enterprise rose 3%, led by Hollister, which additionally noticed comparable gross sales develop 19%.
Abercrombie narrowly beat Wall Avenue expectations on the highest and backside traces. The corporate additionally hiked its full-year income outlook and now expects gross sales to climb 5% to 7%, in contrast with earlier steering of three% to six% development. A lot of that vary would high Wall Avenue expectations of 5.2% development, in response to LSEG.
The corporate’s shares have been up greater than 1% in morning buying and selling.
Here is how the corporate did in its fiscal second quarter in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by LSEG:
- Earnings per share: $2.32 adjusted vs. $2.30 anticipated
- Income: $1.21 billion vs. $1.20 billion anticipated
Abercrombie’s reported web revenue for the three-month interval that ended Aug. 2 was $141 million, or $2.91 per share, in contrast with $133 million, or $2.50 a share, a yr earlier. Excluding the impression of a good litigation settlement, Abercrombie noticed earnings of $2.32 per share.
Gross sales rose to $1.21 billion, up about 7% from $1.13 billion a yr earlier.
“We entered the second half of 2025 on offense,” CEO Fran Horowitz stated in a information launch. “We’re rising our full yr web gross sales outlook, reflecting our robust positioning and development trajectory, constructing on document 2024 outcomes. Our staff stays targeted on delivering for our clients whereas investing to capitalize on the numerous, long-term alternatives for our international manufacturers.”
For its present quarter, Abercrombie’s additionally gave a better-than-expected gross sales outlook. It anticipates income will rise between 5% and seven%, beating expectations of 4.3% development, in response to LSEG.
In the meantime, its revenue outlook for the fiscal third quarter is weaker than anticipated. The corporate anticipates earnings per share will likely be between $2.05 and $2.25, far beneath expectations of $2.53, in response to LSEG.
Abercrombie stated it expects its working margin, a intently watched metric on Wall Avenue, to be between 11% and 12% throughout its present quarter, additionally decrease than Wall Avenue expectations of 13.3%, in response to StreetAccount. The corporate stated a $25 million tariff value, web of mitigation efforts, is predicted to weigh on its working revenue within the present quarter.
For the complete yr, Abercrombie tightened its earnings outlook and now expects earnings per share to be between $10.00 and $10.50. That compares with a earlier vary of $9.50 to $10.50 per share.
Abercrombie’s steering incorporates about $90 million in web tariff prices – almost double what it beforehand anticipated. When it introduced fiscal first-quarter earnings in Might, Abercrombie stated it was anticipating a $70 million hit from tariffs that it might scale back to $50 million by mitigation.
On the time, President Donald Trump‘s so-called reciprocal tariffs have been held at 10% throughout many of the globe. However now Abercrombie faces increased duties on items from Vietnam, Cambodia and India, key manufacturing areas for the corporate.
The corporate reiterated throughout a convention name with analysts that it’s not planning broad worth will increase, saying increased costs aren’t a part of its outlook.
Abercrombie & Fitch, as soon as a forgotten mall model, has been on a rocket ship of development over the previous couple of years. However the surge has began to gradual at its namesake banner. On the decision, Horowitz attributed the decline in gross sales in the course of the quarter to previous stock that it wanted to mark right down to promote by, which decreased the common promoting worth of merchandise. She expects the model to be again to development by the top of the yr.
“We did take a little bit little bit of a step again, however we’re very assured in the place we’re headed. The model is in nice form. Our site visitors is powerful,” stated Horowitz. “We’re assured we’re on a path to enchancment.”
Within the meantime, Hollister has been fueling the general enterprise efficiency, particularly with the latest launch of its Y2K assortment, which brings again a number of the model’s beloved kinds from the early 2000s and a contact of the previous Abercrombie, together with graphic tees and quick skirts.
To spice up development at Abercrombie, the model has turned to new classes, comparable to attire, athleisure and bridal, to stimulate development. It is also working to develop internationally and lean on partnerships.
On Monday, the corporate introduced it will be the NFL’s first “official vogue companion” – a multiyear deal that may embody private styling for athletes, athlete-led campaigns and player-designed attire. The partnership comes after Abercrombie launched an assortment of NFL-licensed merchandise in 2022, a class that has carried out nicely for the corporate.
It has teamed up with star gamers like Christian McCaffrey, Tee Higgins and CeeDee Lamb to promote the partnership and designed limited-edition co-designed attire that will likely be accessible on the market in the course of the upcoming season.
“Who would have dreamed a number of years in the past to companion with an iconic international model just like the NFL?” Horowitz advised analysts.
The partnership displays the steps retailers are taking to make sure they will proceed to develop gross sales and keep related with shoppers at a time when consumers are pulling again on nice-to-have gadgets like new garments and equipment. Rivals like Levi Strauss, American Eagle and Hole have teamed up with celebrities in latest advertising and marketing campaigns forward of the back-to-school and fall procuring seasons.
Nonetheless, the slowdown raises questions on how the model will develop within the quarters forward, particularly as competitors continues to warmth up, stated Neil Saunders, managing director of GlobalData, in a word.
“Higher numbers … will in all probability come by because the prior yr comparatives begin to ease, however additionally they should be engineered by the corporate. We imagine there are some good initiatives in play right here, together with the abroad growth of the model,” stated Saunders. “Our latest channel checks at new shops in London have been all constructive, though we imagine the shops can attain the next potential as soon as the patron financial system within the UK strengthens.”‘
Internationally, Abercrombie’s efforts to develop are paying off in some elements of the world. In the course of the quarter, gross sales in its Asia-Pacific area grew 12%, whereas comparable gross sales climbed 3%. That was offset by a slowdown in Europe, the Center East and Africa, the place gross sales slid 1% and comparable gross sales have been down 5%.
Abercrombie has additionally began to develop into wholesale for its Abercrombie Children model, which most just lately launched in Macy’s. The corporate has a really small share of the general market, which was value $82.1 billion final yr, Saunders stated.
“This leaves appreciable headroom for development,” stated Saunders. “Increasing by wholesale is a wise technique: it gives comparatively quick entry to new clients and requires far much less capital than opening extra shops – of which Abercrombie Children nonetheless has comparatively few.”
